Earlier today, the Bank of Canada came out and shocked the market by cutting its benchmark interest rate 25 basis points to 0.75 percent. Not a signal economist predicted the move, which was its first cut since April 2009 during the depths of the Great Recession.

The BOC said it was buying “insurance” against risk — namely the fact that “the oil price shock increases both downside risks to the inflation profile and financial stability risks.” Canada is the biggest oil exporter among the Group of Seven nations, and policymakers are clearly worried the drop in prices from $108 a barrel to $45 could hammer its commodity-levered economy. The rate cut sent the Canadian dollar to a fresh six-year low against the greenback.

BOC policymakers are worried the drop in oil prices could hurt its commodity-levered economy.

Around the same time we were learning of that move, news leaked about what the European Central Bank is planning to do tomorrow. Both Dow Jones and Bloomberg reported that the ECB could launch a 50 billion-euro-per-month QE program.

That would run around an annual pace of 600 billion euros, or just shy of $700 billion at recent exchange rates. The news led to big intraday fluctuations in the euro, but traders appear to be unwilling to drive the currency dramatically higher or lower until they get more details.

Of course, these moves follow by just a few days the decision by the Swiss National Bank to abandon its currency peg with the euro. That led to the biggest rally in the Swiss franc on record, and caused billions of dollars of losses throughout the shocked currency market. And they come on the heels of a separate move by Denmark’s central bank on Monday to cut interest rates further into negative territory — to negative-0.2 percent from negative-0.05 percent.

So what the blazes is going on? Why are we seeing so many moves by so many foreign central banks?

I believe they’re worried sick about their economies, and the risk of domestic deflation and recession! While the U.S. economy has been holding in fairly well, despite some challenges, the euro-zone economy has been much sicker. That has infected close trading partners that use their own currencies, including Denmark and Switzerland.

At the same time, as the BOC noted, the collapse in crude oil prices has hit Canada’s financial markets and economy harder than other countries. So it felt it had to act in an attempt to stabilize things.

How will everything sort out? And what does all this central bank activism mean for your investments?

Well, we have been a primary beneficiary of all the monetary activism in foreign markets for several months now. Our currency, our stocks, and our bonds have risen in value because all that easy money has flowed here.

“I’m putting more time and effort into evaluating beaten-down energy and materials stocks.”

At the same time, you can make a very compelling case (as I have in the past couple of weeks) that these moves are getting very extended. That’s particularly true in our bonds and our currency. That makes the dollar vulnerable to a potentially major reversal — especially if the markets start to shift toward the view that all of these foreign stimulus actions will actually bolster their economic performance vis-à-vis ours!

So I’ve pretty much jumped off the incredibly crowded dollar bandwagon for now. I’m also putting more time and effort into evaluating beaten-down energy and materials stocks, which could hold incredible value and potential here.

As for you, where do you stand? What are you buying — or selling — because of this newfound activism in Europe and north of our border? Do you think these moves will work, in terms of helping their economies and encouraging investors to give their markets a second look? Or are they too little, too late?

Make sure you hit up the Money and Markets website to add your views to this debate. The results of this debate could dramatically impact the growth of your portfolio in the months ahead.

Our Readers Speak

Well, the State of the Union address last night delivered what I expected when it comes to economic policy. So what did you think of his proposals?

Reader Cy thought Obama was wrong to focus on policies that redistribute wealth from those who have worked hard for their success. His comments:

“Without the risk-takers of our nation, those that take the chance of starting new businesses and expanding existing ones, there would be no jobs for the ‘worker-bees!’ I am puzzled that the Democrats demonize these individuals and preach that they do not deserve to make more than the average wage when they become successful.

“Obama and his minions wish to punish success and take away as much of these entrepreneurs’ rewards as possible, giving perks and freebies to those that, in many cases, simply do not want to work!”

Reader TJ echoed a similar view, calling redistribution plans “nothing more than political shenanigans.” His other comments:

“The government takes from the rich, and then forgets to send it our way. Fact is, Congress has done nothing for the middle class and never will. The only way to build up the middle class is to create an environment where businesses are willing to hire workers and believe tomorrow is better than today.”

On the other hand, Reader Nat H. said it’s about time the government pivots toward a greater focus on average Americans. The view expressed at the website:

“Robin Hood-esque”? SO WHAT! That would be a very good thing for helping the middle class, by undoing at least SOME of the very ANTI-Robin Hood policies of the last decade(s).

“The middle class is the best economic engine and needs major help at this time; ‘trickle-down’ does not work, and will not work, especially given politicians’ ongoing efforts to give more and more to the top 1 percent at the expense of the middle class.”

Finally, Reader Chuck B. said he thinks at least some of Obama’s proposals are likely to resonate with Americans and make their way through the legislative gauntlet. His take:

“Obama seems to have some ideas that may be hard for the Republicans to parry. If he taxes the 1 percent and passes it on to the poor, he is merely reducing the incentive for bottom dwellers to try to move up. If he makes things better for those in the middle though, he gives the bottom more incentive, and moves the middle closer to the top. Maybe a bit more tax on the top, a bit less in the middle.”

It will certainly be an interesting few months ahead in Washington, that’s for sure. What can Obama ultimately push through? What alternatives can Congressional Republicans counter with that will attract mainstream voters? We’ll just have to see!

In the meantime, be sure to share any further thoughts you have on the matter here!

Other Developments of the Day

While we’re on the topic of the State of the Union, here is a Washington Post story featuring the pushback from Congressional Republicans. As a reminder, the GOP has a majority position in both the House of Representatives and the Senate.

What happened to AirAsia Flight QZ8501? Early analysis of the flight data recorder suggests the airplane rapidly ascended — at a rate much faster than it’s designed to do. Then it stalled out, and began to plummet toward the ocean surface. No link to terrorism is suspected at this time.

When will the Federal Reserve raise interest rates? That’s a subject of serious debate. I have maintained for some time that they should’ve started to do so already. But market sentiment has fluctuated over the past several months. Last fall, investors started pricing in a hike relatively early in 2015. Now, they’re pushing it out a bit further into the year.

We’ll learn more on the Fed’s view when it meets next week. Here’s one take from Bloomberg on what to expect.

Speaking of the economy, housing starts rose 4.4 percent in December to a seasonally adjusted annual rate of 1.09 million. Building permits dipped 1.9 percent to 1.03 million. If you exclude multi-family starts and permits, you see that single-family home construction is running at its highest pace in seven years.

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.

{57 comments }

G. PaulWednesday, January 21, 2015 at 5:18 pm

Mike, US economy is doing better not because of QE 1,2,or3. It is doing better because of massive spending (deficits), because our currency is reserve currency, and because there is no other large economy doing better.
EU QE and Canada rate decrease will not impact their individual or global growth. These will only result in money flowing to US, thereby lowering interest rates here. Borrowers will benefit as their interest costs come down. The effect will be temporary.

Rowland SchermanWednesday, January 21, 2015 at 5:21 pm

When I was young, the tax on the wealthiest Americans was around 90%. The country built (and maintained) its infrastructure. There was a viable middle class. The government did not bend over for the wealthiest, It taxed them. The trickle down theory (which never worked) had not been invented then. Citizens United had not been passed, or even thought of. Money has bent our gracious Republic.

Rowland, you are right on target. I seldom ever agree with Barrack Obama on anything but he is right to want to tax the rich more than they are being taxed today. I would like to see the old progressive tax tables that existed during the Eisenhower Administration put back in force. I do not believe the President is correct in wanting to raise Corporate taxes since they just get passed on to consumers anyway. Corporate taxes should all be cut in half to stimulate the economy. But, why should billion airs that get most of their income from dividends pay a lower tax rate that some one working at a hamburger stand? All revenue regardless of where it comes from should be taxed as ordinary income. Having said this Government spending should be cut across the board by 10 percent. The size of Government should be reduced starting with abolishing the Department of Education and returning responsibility for education back to the States.

JimWednesday, January 21, 2015 at 9:21 pm

Do either one of you actually believe for a minute that “raising taxes on the rich” means that the rich will pay more taxes? Most of their dough is in tax free foundations, like the Kennedy’s. The rich pay what they want to pay and the people who work for them get it in the neck to make up the difference. Do you remember all that revenue raised by taxing luxury yachts? The boatbuilders simply died en masse. More revenue is generated by lowering taxes and deregulating so the economy can take off and everybody gets more. Screw Ike, give me Ronny! Jim

phomebarThursday, January 22, 2015 at 2:55 am

The big players don’t consult me. If they did I would hope to hear them say:
Taxing the rich is a cycle like anything else. When Billie Bob has a great job and the economy is strong, dear Billie buys a bigger truck, has more kids, and expands right along with his neighbors. Unfortunately this is unsustainable and taxes are down on the rich through such a cycle. When Billie Bob is forced to get responsible through the squeeze of a slower economy.. Billie squeals like a pig having its nails clipped. In this cycle the rich are taxed higher. Nothing more then a cycle, and some would argue a necessary cycle?
The cycle is of no interest to our attitude laden, short sleeved, ball cap on backwards, clueless Billie Bob. Hey Billie… follow where interest rates are going? Eventually the cycle means loaning money to a coming generation to buy homes. Interest rates need to be high again for that healthy cycle. Home prices will fall with advancing interest rates. Flowing within the cycle (causing it) central banks will painfully wiggle out of the stock market Simultaneously, tons of land lord home owners at some point will flood the market with their rentals up for sale.. Why would they do that? Because as home prices fall with rising interest rates equity hopefuls panic and get out. The specifics of the transitions aren’t clear but 18% interest rates were common with 1962 home loans. But one heck of a nice new home cost $18,000. The cycle will accelerate as banks once again love making home loans over stock market investment. Obama thinks the Billie Bobs have squealed enough so he wants to tax the rich and get a vote. Unfortunately the President is in the wrong part of the cycle. The problem remains once the screws are off the common working man he gets irresponsible in a big hurry while home prices rise in value and the next generation remains shut out of home ownership. Cycle this way then cycle that way? Like I said the powers to be don’t tell little folk like me. Is it coming that higher interest rates and cheaper homes is the norm?… Yes. Coming when the central banks contort into the cycle as steam builds and accelerates. Miscalculation might slow or accelerate a cycle, but cycle it eventually will.
Do today’s low interest rates make for a good time to buy a home? Early on yes, but not now. We are beginning to pay to much for a home as we approach the new cycle. The next generation needs to get in the game and that chance is coming.
The global slowdown is a God send and touchstone for reality. Squeal and blame the rich if we must?

terryThursday, January 22, 2015 at 7:39 am

wasn’t “trickle down” called “voodoo economics” when Reagan first proposed it?
all these bubbles (housing, stock market) are created when the 1% have too much money. citizens united is the result and now big money can buy any politician.

Joe CarterWednesday, January 21, 2015 at 5:23 pm

Obama’s speech last night was a national disgrace. Claiming credit for lower gas. He never had anything to do with it; don’t forget blocking the Keystone Pipeline. The economy is booming? Really, if you are a government employee in DC! How dare he tell so many lies and half-truths. I feel for my neighbors who work two or three jobs, and those who can not find one. And those lies about defeating terorists and reducing the national debt. If he gave all the QE monies to citizens rather banks the nation would be booming. And healthcare. The prices workers are forced to pay for healthcare premiums and the deductibles they must pay are a disgrace. National security and foreign policy suck, too.

Chuck BurtonWednesday, January 21, 2015 at 5:29 pm

It looks like the Air Asia flight maybe started to climb, contrary to instructions, then may have run into a powerful updraft that threw to plane out of control. If there were no openings for them at a higher altitude, why didn’t the ATC order them to divert around the storm, or perhaps land elsewhere until it was safe to proceed? There may be blame at several levels.

wereWednesday, January 21, 2015 at 6:57 pm

Their last words were “allahu ackbar” as reported elsewhere. You can draw your conclusions as to what their motivations actually were.

Roy MuratWednesday, January 21, 2015 at 5:40 pm

The answer to income equality is education. Instead of income redistribution which will not stand a chance of passing, why not focus on something that will. Support for improving our schools thru incentives for teachers, parents & students.

FredWednesday, January 21, 2015 at 7:41 pm

MORE for teachers? Here in California a union teacher with 10-15 years experience gets 100-120K per year for 9 months work with a retirement, cadillac med plan to die for. Why do they need more?

JimWednesday, January 21, 2015 at 9:26 pm

50,000,000 people are qualified to teach school, only 500 can hit a fastball. They should be paid accordingly. Jim

Donald LinkWednesday, January 21, 2015 at 5:41 pm

The world’s central bankers, including Janet Yellen, have lost their collective minds. When everything comes a cropper, and it will, we will all suffer mightely. The only hope is to anchor the dollar with slow but but steady interest rate raises and hope it’s not too late.

LeopoldoWednesday, January 21, 2015 at 5:41 pm

It is the gospel!
The Cuban Embargo Was Never Meant To Cause Regime Change
David Landau
Novelist
David Landau, a San Francisco editor, used to be a foreign-policy expert but gladly gave that up to be a novelist and playwright.

The more they say, the less you know. That seems to be the maxim behind President Obama’s latest foreign-policy move: his proposal to overturn the Cuba embargo and pursue full diplomatic relations for the first time since 1961.
In the words of the official statement: “Decades of U.S. isolation of Cuba have failed to accomplish our objective of empowering Cuba to build an open and democratic country.”
Against all you’ve heard, here is the central fact: it was never the embargo’s purpose to cause a change in Cuba. Quite the contrary, the embargo’s purpose was — and still is — to protect Americans.
In that endeavor, the embargo, far from being a failure, has been a striking success. But hardly anyone sees it that way, because the matter has been buried beneath a fiction that haunts even those who might oppose the president’s proposal.

In its first 18 months of power, Castro’s regime seized American businesses and properties to the tune of $1 billion (1960 dollars). That massive theft was the proximate cause of the embargo. The U.S. cut its purchases of Cuban sugar and then cancelled nearly all trade.

As everybody knows, the U.S. then tried to overthrow Castro’s regime at the Bay of Pigs. That benighted event has given a sinister image to America’s Cuba policy. But U.S. efforts to bring about change in Cuba came to a certain end the following year, with the resolution of the missile crisis. And serious efforts by the U.S. to deal with Cuba and Latin America became much more sporadic after JFK’s assassination. For five decades, faute de mieux, the centerpiece of U.S. policy toward Cuba has been the embargo.

Hardly anyone talked about the embargo until the 1980’s, when the Soviet Union, which had been bankrolling Castro’s regime, began to fold. Castro and his allies, casting about for a new patron, looked with hope to the U.S. and created the myth of the failed embargo. The goal of the embargo, they said, had been to change Cuba. But since Cuba had not changed, the embargo was a futile policy and should be withdrawn. It was a sleight-of-hand, with the same party supplying both sides of the argument. While patently false, the argument has turned out to be remarkably durable.

As a matter of fact, the embargo policy has allowed for substantial trade between the U.S. and Cuba. With the total of U.S. exports for the last ten years reaching above $4.2 billion, America is one of Cuba’s largest trading partners. Even in the absence of full diplomatic relations, America’s Interests Section in Havana is a massive installation with several hundred employees; an embassy in all but name.

The problem with the embargo, for Cuban officials, is that it does not allow Cuba to do in the United States what it has done in the rest of the world. The embargo has denied Cuba a credit card on these shores. Cuba has not been able to borrow from U.S. banks or companies. All of Cuba’s U.S. purchases must be paid in hard currency, by advance deposit. These strictures have been well founded, their wisdom amply confirmed.

Note: It is also very important that it be known that Communist ruled Cuba is one of the largest Debtor Nations in The World. They are good at borrowing but never pay back what is borrowed. If anyone has doubts, go ask Mr. Putin about the Billionaire Cuban Dept that he has very recently had to cancel knowing that it was never going to be paid. The same will happen to any naive wishful thinking person that invests in Cuba while the Castro Family rules. Foreign owned Businesses have also been confiscated at will. LAO

FredWednesday, January 21, 2015 at 7:45 pm

Obama will be giving them billions of our money before he leaves office. He has never seen a communist government that did not dazzle him with dreams of his anti-colonialist, communist father who abandoned him or some such nonsense.

billWednesday, January 21, 2015 at 5:54 pm

HI, I’VE HEARD ABOUT OBAMA WANTING TO TAX THE RICH MORE… I FIND IT INTERESTING THAT WHEN THE EUROPENANS DO SOMETHING STRANGE THAT U.S. PRESIDENTS WANT TO DO THE SAME LAME BRAIN THING… SOCIALISM BEING THE BIG DOG IN THE YARD…

OF COURSE IF YOU KNOW THIS YOIU CAN ADJUST YOUR BUYING STAGERTY TO MAKE MONEY ON THIS, RIGHT ???

FRANCE RAISED TAXES ON THE RICH SOME YEARS BACK AND THE “OLD MONEY” FLED THE COUNTRY… IT SEEMS ALOT OF THEM ACTUALLY WENT TO ENGLAND WHICH WAS A SURPRISE TO ME…

OBAMA’S WISH TO GIVE MONEY TO THE POOR OFF OF THE BACKS OF THE RICH WILL FAIL AS THE SAME IDEA DID OVER IN FRANCE…FRANCE EVENTUALLY RECANTED ON THIS POSITION I UNDERSTAND…

I FIND IT DIFFERENT THAT THE FED HERE IN THE U.S. IS DONE WITH THE Q. E.’S JUST TO FIND THE REST OF THE SANE ??? WORLD NOW DOING THE SAME THING… ALL THIS IS DOING IS PUSHING FOREIGN CAPITAL INTO U.S MARKETS WHILE THEIR OWN GOVERNMENTS FACE A DEGREE OF PERIL…

jrj90620Wednesday, January 21, 2015 at 6:15 pm

Taxing only the rich,is the way the original 1913 income tax started.It was 7% and only on the rich.Eventually,the Fascists(AKA Govt worshippers or Democrats) gradually taxed lower incomes.Also,as inflation causes nominal incomes to rise,people move into higher tax brackets.What we need is ONE fixed % tax,for all incomes,that stays that way,for decades.Like sales and use taxes,that aren’t different for higher income people.Constantly changing the rules of the game(tax rates,etc.) is not efficient.

ChrisThursday, January 22, 2015 at 6:15 pm

a flat income tax ???!??! that’s the way to scare off the taxpayer and anyone else that makes money .. since not only does it take money to make money .. all it does it hurt the poor worse .. also called the 10% flat income tax .. the person who makes $50000 dollars can afford to pay $5000 in tax and still get by … but the person who makes $10 in any money made can’t afford to get by with 9 etc.

jrj90620Wednesday, January 21, 2015 at 6:10 pm

“So I’ve pretty much jumped off the incredibly crowded dollar bandwagon for now. I’m also putting more time and effort into evaluating beaten-down energy and materials stocks, which could hold incredible value and potential here.”
Good for you Mike.I think you have figured it out.

FredWednesday, January 21, 2015 at 7:47 pm

If you include oil in those, watch out for the next leg down. I think Larry will be right on this call. One more big move down.

scott dittrichWednesday, January 21, 2015 at 6:27 pm

Note that the President did not make these proposals when his party controlled the Senate and both houses of Congress. His policies have been a disaster for the working man and people of color but a boon to the 1 per cent. Taxing the wealthy will not help the so called middle class. Socialism with high taxes to pay for lots of ‘free’ stuff levels the playing field but shrinks the overall level. Socialism limits the kind of growth that leads to upward mobility and good jobs. The results of the last six years were soundly rejected last November because they do not work. They never have.

BarryWednesday, January 21, 2015 at 6:53 pm

Federal Reserve will give the thumbs up at the meeting and start on October 28,2015 to Raise Rates..

BarryWednesday, January 21, 2015 at 6:53 pm

Federal Reserve will give the thumbs up at the meeting and start on October 28,2015 to Raise Rates..

tommrWednesday, January 21, 2015 at 6:56 pm

Last night’s SOTU Address made it quite clear that most Americans are still eyeing their neighbor’s property. They seem to be unaware that this it a sin! The tenth Commandment warns against this activity.

wereWednesday, January 21, 2015 at 6:59 pm

It will be interesting to see what will start making gold/silver tank towards major bottoms starting this week.

benlukWednesday, January 21, 2015 at 9:39 pm

With pretend money (fiat money) almost worthless gold and silver will NOT tank. Get a grip.

wereWednesday, January 21, 2015 at 10:38 pm

I look forward to your comment (an apology) at the end of March.

JimWednesday, January 21, 2015 at 11:45 pm

Gold and silver make me want to go postal. Jim

MMBWednesday, January 21, 2015 at 7:13 pm

Here is how the “step up” will cause a disaster for some families.
Ranchers, farmers, growers who have owned their farms for a few generations and have a low basis , will be greatly hurt. Now where will your food come from? Imports!

HolygeezerWednesday, January 21, 2015 at 7:15 pm

The only reason the US is doing “better” than other countries around the world is that the US and its Federal Reserve owners have found “creative ways” to manipulate the system a little better than the others. The US is being run by a bunch of crooks who cheat the system to their advantage. Just like the New England Patriots. Cheaters one and all.

AKWednesday, January 21, 2015 at 7:46 pm

Good article. However, ” Not a signal economist predicted the move”!

“signal economist “, Mike?

Comrade Obama appears to have no other ideas except raising taxes on some group. His focus seems to be penalizing the successful to fund giveaways for the poor.

Free community college? Really? What happened to working one’s way through college? What about promoting work study programs? Most people don’t appreciate what they’re given for free.

There’s little point in people getting degrees if the economic policies aren’t conducive to business growth. I didn’t hear Comrade Obama say anything about that. As a matter of fact, the much vaunted Obamacare mess has been a royal headache to small businesses, which incidentally provide 2/3 of the nation’s employment.

Comrade Obama was, and remains, a community organizer, albeit with a much bigger reach!

jeffWednesday, January 21, 2015 at 7:59 pm

Mike, I subscribed to your newsletter a few years back, then cx it. It did not do a thing for me. You try to read to much into so much information and get it wrong. Anyway, I still read your stuff?

ed kemenaWednesday, January 21, 2015 at 8:38 pm

seems like the owners of the federal reserve,[zionist non jews-rev.2-9 &3-9,king james] are controling all fiat monitary systems, and racing all down to zero value ,so they can save us all-ha!-ha!-by creating their one-world-order fiat currency! corporate-fascioust system , of total control [surfdom for all humans ],which will attempt to extinguish all christians!as what the zionist have been doing ,world-wide, now -their controlled media,hides from the goim!get the book, [the protocols of the learned elders of zion]!at texemarrs.com—and see how close they are to completeing their protocols already !

JimWednesday, January 21, 2015 at 9:38 pm

The most brilliant part if their plan is that it is so outrageous it makes people who have actually figured things out sound like complete lunatics. A few years ago EVERYBODY said Alex Jones was nuts. Nobody is saying it now. Keep plugging Ed. Jim

Charles E. KanterWednesday, January 21, 2015 at 9:02 pm

I am frankly astonished at the lack of understanding, unfortunately promulgated by the likes of FOX News, about “redistribution” of wealth and this ridiculous “Robin Hood” metaphor. Sorry, but helping the middle class is in no way hurting you and your opportunity to keep the wealth you have. Helping the middle class is helping them obtain OPPORTUNITY to do as well as we have. For instance; if the “government” contracts for an infrastructure project, they hire PRIVATE INDUSTRY to do the actual work. This creates OPPORTUNITY for the “middle class” to obtain, good well paying jobs. Somehow or other I suspect you also use the roads, airports, bridges, etc. that the rest of us 10% use. Both government and , ugh, taxes! are a necessary ingredient in running a successful civilization. We live in the best, most prosperous society ever created. I am fiercely proud to pay my share of the tab.

Richard K.Wednesday, January 21, 2015 at 9:05 pm

As a Canadian, I find it somewhat ironic that the Bank of Canada has expressed concerns regarding the high level of debt the average Canadian carries (now at C$1.68 for every C$1.00 earned) and now by lowering interest rates has add more fuel to a hot housing market and higher levels of consumer debt.

In another bit of irony, our Prime Minister who has a degree in economics, has eviscerated the government’s revenue stream throughout the fall by handing out expensive tax cuts while oil prices were falling like a rock in an attempt to bribe Canadian voters for a federal election that must take place later this year. Meanwhile, our federal Finance Minister humming to the tune of “Don’t Worry Be Happy” has delayed the federal budget and still promises that the government will be able to balance the budget without further cuts to spending while every economist and bank has stated this will now be impossible.

The governing party believed that high oil and commodity prices would last forever and that the tax revenues from the high prices would allow them to fund massive tax cuts to corporations (corporate taxes are the lowest in the G7) and Canadians while massive spending cuts would balance the budget. With the collapse in commodity prices the federal government cannot take any action to stimulate the economy without significantly increasing the size of the deficit and therefore make future generations responsible for this government’s poor fiscal management.

DennisFWednesday, January 21, 2015 at 9:23 pm

Just a few thoughts on the wealthy. In the words of Gordon Gecko:

The richest one percent of this country owns half our country’s wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It’s bullshit. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal.

One of the big cons by the Republicans is to label EVERYONE with any money as a job creator and deserving of lower tax rates. A small portion of the wealthy actually create jobs and can be called “entrepreneurs”. I don’t believe in higher taxes, but a HUGE portion of our current national debt was created, according to CBO analysis of annual deficits over the last 30 years, by the tax cuts for the wealthy starting with Reagan. And now the corporations are piling on – those that pay NO TAXES regardless of the statutory rate.

At some point the debt has to be paid off, and since much of it was created by tax cuts absent concomitant spending cuts, maybe those people who got the tax cuts should help with the payback instead of the Republican Party’s real agenda, make the bottom 50% pay for EVERYTHING.

Bret SmithWednesday, January 21, 2015 at 9:33 pm

Regarding Obama’s speech last night regarding raising tax rates on the wealthy. The US taxpayer bailed out the Wall St elite to the tune of hundreds of Billion$. We were not asked about this, or given a chance to vote on bailing out the crooks who destroyed the economy. This banking elite were then allowed to borrow money at 0% interest and continue their dangerous games of investing in derivatives in the OTC market.
Hedge Fund traders are only taxed on their income to the tune of 15%, and they are using proprietary algorithms to game the Mom and Pop and average investor.
Tax the crap out of these crooks and put them in jail !

Milt TWednesday, January 21, 2015 at 9:58 pm

The President said he will give money to the “Middle Class” but he did not say how or where he will get the money.

john montreal quebecWednesday, January 21, 2015 at 10:00 pm

As I read your comments as a Canadian here in the Montreal area. I hope you will allow me to put my view from the north so that other Americans can understand what/why the reason the Bank of Can. did what it did. See it works different here very few private banks, If a company want a loan it pays Prime rate ( B of C rate) plus a interest rate this keeps the loan sharks away. by the way all banks or national finances are governed by this rate so it drops so does you payment. an with energy down in value, this would be a big drop on a struggling Company or town. or government dept. this is a good thing! imagine what effect it would have on your national dept. Now imagine what effect the raising of the interest rate will do. to it. I believe it’s 17 tril. an up. excuse me if I am wrong but the result is going to kill the green back as it is now your dept. to money profit ratio theoretically isn’t the US bankrupt.
As I read all finance news ,notices, that I can get. … It strikes me as to the fact that most of you American friends disagree with your president., and aren’t you glad you can! as their are many regimes where it’s jail or worst as the Poor Canadian in Saudi is getting whipped ever 2 nd Friday because he bad mouthed their government . His wife and daughters escaped, and are safe in Quebec here, those pricks can ‘t touch them, as you know we shoot to kill! terrorists. (2) but he is being held in an prison. then let out whipped and then back in to heal. then out again… nice people! what to hell are we doing trading with this scum , we buy oil ??? why/ the US banks their money why???
as for the rate cut it should help the loans of the industries. and national dept. also the U.S. dept. as we bought some of it here to. what I am worried about is the size of the U.S. dept. and the non use /limited use of the green back as a world currency by other nations. when the sats. come out we see a reporting of manipulated figures, to suit the dog & pony show, showed to the rest of the world, but we are too close to not see and converse with the friendly American people in the north east. Canadians are over the border like a 2nd home. Yes it shows industries are up but where are the real prof/loss statements. The average sole is still hurting, thinks the world is against them, and the government is trying to take their little nest egg. So what gives if the people speak don’t the Washington folks listen or are they like our boys filling their pockets to care. If the XL pipe line ever gets going the north American continent will almost run the energy of the western world. and imagine the jobs that will be created. as long as the salaries of both countries could be equal because the U.S. has always being lower than ours. why??? eg: your min. wage is poverty, but don’t over tax the rich it will back fire, We have a T.F.S.A.( tax free saving account) available to all Canadians, it has a max. of 5500.00 per year deposit. BUT it can hold almost any kind of security, bond, stocks, cash, etc:, and we get to keep all profits tax free. some rules apply about with drawls and returns in the same year. but it can not be taxed it’s yours to enjoy. The US Gouvn. needs to in act this too, to get people to save money and not be afraid of taxes , it was a mixed here at first 5000.00 max and people were under the impression it was for cash only, as soon as it was discovered that it could run as a umbrella, it hit off . Yes RRSP’s are good but you will have to one day pay tax on the with drawl at age 71 but not the TFSA. We are now up to 40,000.00 dollars net allowed plus profits since interjection . the sky is the limit for now. I hold US stocks from the Dow. and Nasdag in it. It is doing well. also Hedge funds I max out it every yr. it is loaded with securities. I don’t want your economy to drop. Because if foreign money sells, we probably would all sell off the US funds here. it is going to hurt yours, as now it’s approx. 20% exchange you have a high dollar, remember we bought at almost par. that’s 20% more coming out of your economy and into our pockets, and the green back returned to your banks and not out in circulation eak! what a mess. Don’t let it happen please. get together.
Keeping an eye out. . If you do not like what I said please tell me as I am on the outside looking in.
thanks WJP..

BrianThursday, January 22, 2015 at 8:09 am

Quite the wind here WJP. You were all over the place with you comment and obviously you are fairly in tuned to the effects that a reaction to one with create a reaction to another. Our political bodies have not listen to the people for many presidents now. They have been so busy trying to rule the world that they forgot the reason why they are there in place in the first place. The vast majority of them haven’t a clue how the world runs financially nor do they care. They are on their quest of their own agendas to make lots of money for their friends and themselves by introducing ridiculous bills that solve nothing. The web of rules, laws, bills, etc that they dream up on ways to steal the money of the people who vote for them is an ironic scenario. The $ will fall no matter what and this is a cycle that happens. Just learn how to make $$$ the best you can in the events of these cycles that you cannot control. I only been to Canada a couple times but it has always been a blast and met some very good people. Hopefully you are of the same!
Good Luck!
fisherbri8

JoyWednesday, January 21, 2015 at 10:15 pm

Weath has been redistributed upward since 1980 and the start of trickle down voodoo economics. It didnt and doesnt take a genious to fire lower and middle class workers and strip assets from companies…and then act as if it was smart management that made the stockholders richer. If you take away peoples livlihood…they are going to be poorer. They are not lazy. Now they could work 3 part time jobs at minimum wage and still not own a home. Anytime you put money into the hands of people that need the money to live, you will see more spending in local economies which in turn puts people to work. But no way…will we EVER come close to the earnings of the top one percent…who make 1000 times what low wage earners make. THEY should be paying much much more taxes because they have much much more power in politics…buying elections and so forth. The worlds economy is in bad shape BECAUSE of the gap between rich and poor. The people who make between 50 and 100,000 are being squeezed from all sides and are trying to stay above water, but are pretty much on their way to sinking. The world economy is in bad shape because of TOO MUCH SUPPLY and NO DEMAND (the buying power of the people). Government cannot keep up the demand side any longer. A day of reckoning has come. Trickle down economics says all you have to worry about are the suppliers. Just keep making products with no one to buy them. You already see where it has all led.

Steve H.Wednesday, January 21, 2015 at 10:44 pm

My father always said “you can’t send a dollar to Washington , get a nickel back, and think you came out ahead.” Wise man my father!!

MikeThursday, January 22, 2015 at 1:59 am

You’re absolutely right, Mike Larson, that interest rates in the U.S. ought to be a lot higher than they are, partly because keeping rates so low has been severely distorting all the financial markets. But no rise in rates is likely to happen during this decade, because the U.S., unless it gives up all of its spending on military matters, simply cannot afford the cost.

GregThursday, January 22, 2015 at 5:10 am

No comment at this time

Paul GrantThursday, January 22, 2015 at 6:00 am

It would seem that the prdictions in Ayn Rand’s book “Atlas Shrugged” are not so slowly coming to pass. I hope the outcome is not as dire as she predicted.

BrianThursday, January 22, 2015 at 7:45 am

I also Have jumped away from the strength of the mighty dollar. I have enjoyed the calls on UUP and am now awaiting the descend which I know is coming. I just wish I knew exactly when that was? :)

SydThursday, January 22, 2015 at 8:48 am

We need to look closely at exactly what the ECB is doing. Because Germany was opposed
to being liable for Draghi’s purchase of bonds of questionable value in other countries it was decided to make each country only liable for the purchase of its own bonds. That will reduce the risk but not compensate for the ECB’s Currency War. This will eventually backfire, and the world will be worse off because of this tampering.

Tams WilsonThursday, January 22, 2015 at 8:51 am

There is an old economic axiom: Tax anything and you will get less of it… subsidize anything and you will less of it. Tax the rich and you get less rich prople… subsidize the poor and you get more poor people.

Tams WilsonThursday, January 22, 2015 at 8:53 am

I meant to say…
There is an old economic axiom: Tax anything and you will get less of it… subsidize anything and you will more of it. Tax the rich and you get less rich prople… subsidize the poor and you get more poor people.

georgeThursday, January 22, 2015 at 9:24 am

Manipulation is the word. Big gov. Is corrupt and the bigger it gets the more power it has. The financial world is now consumed by politics and corruption on a world level. There is nothing goo about this situation.

Ronald StolpmanThursday, January 22, 2015 at 9:28 am

I have always believed that raising taxes was the wrong thing to do. But if Obama wants to raise taxes on the rich, and if rich means earning more than one million a year, I would be supportive if the additional taxes raised by taxing incomes north of one million were dedicated to paying down the debt.

BethThursday, January 22, 2015 at 2:50 pm

It’s okay if we don’t do something to bring up the poor a little bit. As history has shown us, when a huge gap exists between the rich and poor, revolution always follows.(Think Russia and China and other countries.) Then the poor merely take everything they can from the rich and chaos ensues. But for those who object to Obama’s plan, keep looking over your shoulder. Sooner or later, those disenfranchised masses will take matters into their own hands. Or we could help them now without feeling much pain. Your rich person’s choice.

Al McNalFriday, January 23, 2015 at 1:23 am

For the US individual credit one form of money has increased around 50 times what was fairly reasonable in the early 1950s. In the mean time government debt has essentially increased around 70 times during that time frame. Government debt has doubled since 2009 when individual debt (or credit) reached it’s peak. Individual credit has decreased since 2009 but not significantly. In total that turns out to be roughly around 100 times the credit we had in 1950.

That credit is collapsing or soon will and as society realizes this it will collapse even faster. Governments the world over have all been playing the same credit expansion game which has allowed it to seem more realistic and extended the effects making them seem permanent. Once society sees this credit as unreasonable central banks won’t be able to print and borrow enough to have significant effect upon the collapse of credit.

GEORGE G, TAGLIANETTISaturday, January 24, 2015 at 9:02 am

you want to fix the middle class – THERE IS ONLY ONE ANSWER –LIKE OIL- —-PRICES ACROSS THE BOARD MUST COME DOWN. THAT IS HOW YOU PUT MORE MONEY IN CONSUMER POCKETS AND YOU DON’T HAVE TO WORRY ABOUT DISCRETIONARY TAX PROBLEMS- BUT THE CORPORATIONS WON’T LIKE THAT EITHER- THEY WILL HAVE TO WORK HARDER BY CUTTING PRICES TO DO MORE VOLUME AND HIRING MORE PEOPLE TO MAKE UP FOR THE VOLUME AND THERE BY DOING MORE BUSINESS BECAUSE OF THE LOWER PRICES- MAKING MORE PROFIT-AND CREATING THE RIGHT AMOUNT OF JOBS IN THE BALANCE- AND HELPING THE ECONOMY ACROSS THE BOARD AT THE SAME TIME! THIS WILL BE GOOD FOR THEM IN THE LONG RUN -BECAUSE I’LL TELL IT IS COMMING ANYWAY- LIKE IT OR NOT- CENTRAL BANKS ARE UP AGAINST THE WALL REGARDING THIS MONETARY EASING BUSINESS AND THE CURRENCY MADNESS IN EUROPE AND SWITZERLAND IS PROOF THAT DEFLATION WILL BE FORCED IN LIKE IT OR NOT- IT IS TIME TO WAKE UP AND DO THE RIGHT THING- IT WILL BE GOOD GLOBALLY FOR ALL….
GGT

JP FrogbottomSaturday, January 24, 2015 at 11:05 am

It seems TAX policy lies at the heart of our problems.

Should each citizen, or Corporation based in the US pay a share in running the government? (Think minimum tax idea here)
Should every company doing business here pay a certain amount for exercising the privilege? (think import taxes here)
Should those who have done much better than average, pay much more than “average”?
(Think progressive tax rates here)

When I hear of GE, GM, and other large Corporations paying NO federal income taxes, or getting a huge tax refund because they had a bad year, I can understand it, because our TAX policy allows it. It is not uniform, it is not fair, it is not up to date.

Someday, Americans are just going to say, “screw you guys, come find me.” As inept as the government has been rooting out ‘waste fraud and abuse’ do you really think they will find the guy who drops out of paying his taxes? FIX the problem at the source, or be prepared for what comes next!!